Ford facing bill of $2.5bn in ignition fault settlement

FORD faces a bill of up to $2.5 billion (£1.75 billion) after agreeing to settle a six-year class action lawsuit that alleged ignition problems on millions of vehicles.

The legal action claimed that as many as 22m cars and trucks were prone to stalling, in what is one of several safety issues affecting the motor giant. Ford has agreed to pay for repairs on the vehicles sold in the United States between 1983 and 1995 in a deal that is described as a "warranty extension".

Ford continues to insist the ignition devices are not defective, a stance the judge earlier described as "Alice in Wonderland", and has admitted to no wrongdoing in the settlement.

The plaintiffs suggested a cost of $2.5 billion to Ford, a figure the company disputed without offering one of its own. Ford attorney Richard Warmer said: "This will not be something that will have a material affect on the company's financial position."

The deal will allow the world's second-biggest carmaker to put at least one controversy behind it. It still faces litigation over deaths suffered by drivers and passengers in its Explorer model, which is said to be prone to "roll over". Ford blames the Firestone tyres that came with the cars and is spending $3 billion to replace them.

In September the company recalled nearly 780,000 Windstar minivans after it emerged they had faulty parts that could catch fire.

Last week Ford disclosed losses of $692m in the three months to September, compared with profits of $888m last year. Rumours of a bust-up between chief executive Jacques Nasser and chairman Bill Ford have swirled for months despite attempts by both men to deny any disagreement.

The company dream of replacing General Motors as the most valuable car business in the world seems a long way from being realised.